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Wednesday, 29 January 2014
Oil news today
Egypt, much like Iran controls strategic routes in the international oil trade
Oil Price and Egypt By STEVE AUSTIN for OIL-PRICE.NET, 2013/08/05
Go, check the oil prices. Haven't they galloped to $106 a barrel? Indeed they have, on the back of turmoil in Egypt and tensions with regard to the Suez Canal. Not long ago, the uprisings in the Middle-East pushed the price of Brent Crude to over $100 a barrel, just like that. Evidently, notwithstanding sporadic declines, oil prices have shown remarkable resilience boosted by speculative trading in the stock market. And, the story has just begun with Egypt under the spotlight in this saga.
Egypt
President Mohammed Morsi has been ousted, the army seeks greater control, the tourism sector is in doldrums, foreign currency reserves have fallen and the streets continue to be volatile. But weren't the oil prices climbing even before the crisis in Egypt? After all, tensions in Egypt started well before Hosni Mubarak's expulsion in 2011. Yet, that's how the market behaves. Hang on, before you raise your eyebrows, don't you -often- buy things because they come wrapped in glittery casing? Egypt is a different kettle of fish, just so.
Egypt, as you may have heard, is the second largest natural gas producer and the largest non-OPEC oil producer from Africa. According to EIA, Egypt's total oil production averaged around 710,000 bbl/d in 2011. However, the imports in the energy sector have been increasing due to falling domestic production as well as slowdown in exploration because of the unrest in the country. The weak Egyptian pound has compounded the woes making imports too expensive, even as the country seeks loan from the International Monetary fund. Of course, some of the recent discoveries in Natural Gas could help the fragile energy sector. Yet, the underlying fact remains: Egypt isn't a major oil producer.
Then why are the investors worried?
The answer to the question lies with Suez Canal and the Sumed (Suez-Mediterranean) pipelines- strategic routes for oil shipment of about 3.8 million barrels a day of crude and products from Persian Gulf to Europe.
First, the Suez Canal. Geographically, the busy canal connects the Red Sea and the Gulf of Suez with the Mediterranean Sea, covering almost 120 miles. Petroleum (both crude and refined products) accounted for 15 percent of Suez cargos, measured by cargo tonnage, in 2011, while Liquefied Natural Gas accounted for six percent. An estimated 17,799 ships transited the canal from both directions in 2011(a fall compared to the 35,000 ships in 2009), of which 20 percent were petroleum tankers and 6 percent LNG tankers. Earlier, the canal was unable to handle very large crude carriers. However, the Suez Canal authority extended the depth to 66 feet allowing almost 60 percent of all tankers to pass through.
The Sumed Pipeline is 200 mile long passing through desert and sparsely habited areas. This pipeline is an alternative for cargos too large for the Suez Canal. The two parallel pipelines of 42 inches in diameter have a capacity of about 2.4 million bbl/d. Shipping mainly Saudi and Iraqi oil to European Markets, this pipeline moves the northbound crude from the Red Sea to the Mediterranean Sea, and is a joint venture between Egyptian General Petroleum Corporation (EGPC), Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and Kuwaiti companies. Recently, Iran was forced to transit about 100,000 barrels a day of oil to Turkey through the Suez canal after a ban on using the Sumed pipeline.
SUEZ and SUMED
Suez is near cities that have seen major violence in recent years. If there's disruption in the Suez Canal, there goes the Sumed Pipeline. As pointed by IEA, the Sumed pipeline can carry an additional 900,000 barrels a day of capacity, should any disaster strike the Suez Canal. But what the Sumed pipeline were dirupted as well? If so, the oil tankers from the Persian Gulf to Europe would have to travel around the Horn of Africa, adding 6,000 miles / fifteen days to the transit time. Bah!
Together, these concerns and the risk of a full-fledge civil war like in Syria are the main reason for the rapid rise of oil prices. Also, the Egyptian unrest has seriously affected supplies from Libya, Nigeria, Iraq and has also caused temporary disruption to some supply routes within the United States, says the IEA.
Reading into all this, is what worries the people in the Wall Street. Who wants to calculate that only about 2% of the world's oil passes through Suez every day? If you remember, rumors of Iran's threat to close the Strait of Hormuz, a strategic route for almost 20% of the world's (traded) oil, have, in the past, pushed up the oil prices. And looking at history, the Iranian revolution in 1979 pushed prices above $40 per barrel- then. So, as far as the stock market is concerned, future worries on demand and supply disruptions, be they just rumors, matter a lot.
Of course, Egypt with its struggling economy could impose transit fees, or indirect surcharges for revenue which could raise the oil prices even further. Indeed, the Suez Canal authority has raised tolls on the canal in May by two to five percent raking a few billions in the bargain. Another price hike could be counterproductive with declining trade between Asia and Europe.
Cost of stability? 1.3 billion per year
Egypt is the second largest recipient of US military aid (after Israel) with a massive 1.3 billion dollar annually, a whole quarter of Egypt's military budget. As it turned out, raising tariffs by a record 5% on Suez canal fees was one of several career-limiting moves for president Mohammed Morsi who was promptly deposed by the US-funded Egyptian military. Since then the Egyptian military has been in control and ensuring both Suez and Sumed are operational. Mere days following Morsi's demise, Washington promised the delivery of two F-16 jets to the Egyptian military. So in the end, despite the street-level unrest related by the media, oil routes are in reality under friendly military control, a plus for oil price stability. You get the picture.
Recent decline in domestic crude oil inventories
A report published by the American Petroleum Institute showed a decline in crude oil inventories of 2.6 million barrels with a fall of 900,000 barrels in gasoline supplies and a decline of 700,000 barrels in distillate supplies. Meanwhile, commercial crude inventories have fallen by 2.8 million barrels with the total U.S. commercial crude inventory of 364.2 million barrels. In the previous week, crude oil inventories fell 6.90 million to 367.00 million barrels. The fall in crude supplies is attributed to reduction from Canada as well as increased demand from the WP Whiting Indiana Plant that restarted work. In spite of the drop in the crude stock piles, the inventories are at more than comfortable levels and so is the gasoline supply.
WTI crude price at Brent price levels
For the week that went by, crude imports averaged 327,000 barrels a day up by more than 8 million barrels a day. On the other hand, refineries, for the above period, were reportedly running at 92.3 % of capacity with daily input of sixteen million barrels per day. At least for the domestic refining sector in the US, the present is the best time. One reason for the- recent- narrow price difference between WTI and Brent crude oil prices.
Elsewhere, China's manufacturing has reported an eleven month low this month. Analysts fear of a slowdown in Chinese economy with lesser demand for oil. So the latest weak manufacturing data from the Asian Giant is all it prevents the investors from going hunky-dory over the prices. As if they aren't already high, even with record oil production in the US. We hear you.
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Monday, 24 June 2013
Shell takes FIDs for Niger Delta projects after pipeline explosion
Shell Petroleum Development Co. of Nigeria Ltd. (SPDC), operator of the Nigerian National Petroleum Corp. (NNPC)/SPDC joint venture (SPDC JV), reported that the group has taken final investment decisions for the Trans Niger Pipeline loop-line (TNPL) and the Gbaran-Ubie Phase Two projects. Both are in Nigeria’s eastern Niger Delta.
Total capital investment of the two bundles of projects is $3.9 billion, SPDC said.
Trans Niger Pipeline (TNP) carries 180,000 b/d of crude oil to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, “critical for continued domestic power generation (Afam VI power plant) and LNG exports,” SPDC said.
Explosion, fire at theft point
On June 19, SPDC JV had shut the TNP system following an explosion and fire at a crude theft point on the 28-in. section of the facility at Bodo West in Ogoniland.
Before the incident, SPDC had shut down the 28-in. TNP to remove crude theft connections. It then closed the 24-in. TNP as a precautionary response to the fire, effectively shutting in the entire TNP system and deferring some 150,000 b/d of oil.
“This is another sad reminder of the tragic consequences of crude oil theft,” said Mutiu Sunmonu, SPDC managing director and country chair, Shell Cos. in Nigeria. “Unknown persons continued to reconnect illegal bunkering hoses at Bodo West even as our pipeline team were removing crude theft points. It was therefore not surprising that the fire occurred from the continuing illegal bunkering even as a previous crude oil theft point was being repaired by the team,” he said.
Shell said the 24-in. TNP will be reopened when it is safe to do so, while the 28-in. TNP will remain shut-in until the fire has been extinguished and investigation and damage assessment completed.
Sunmonu said that so far there was practically no spill from this event as the oil is burning off. “What is visible in the water is from an earlier oil spill which was also as a result of oil theft,” he said.
“The explosion also triggered a fire on a nearby barge,” Sunmonu said, adding, “Crude theft continues to pose significant challenges to the people, environment and the local and national economy, and all stakeholders must work together to stop this criminal activity.”
TNPL design, Gbaran-Ubie Phase Two
The design of the TNPL, the system’s loop-line, will include improvements that make the line better protected against theft and sabotage, SPDC reported. Total capital investment for the TNPL project bundle is estimated at $1.5 billion and is proposed to be executed by three indigenous contractors “who have grown steadily over the past 5 years from medium-sized companies to big players in the industry,” SPDC said.
The Gbaran-Ubie Phase Two project, meanwhile, consists of five gas supply and infrastructure projects that are critical for the continued gas supply to the Nigeria Liquefied Natural Gas plant and the Gbaran-Ubie domestic power plant. Total investment for the Gbaran-Ubie Phase Two bundle is $2.4 billion and the project's construction includes local and international companies. The expected peak production from these projects is 215,000 boe/d.
Sunmonu said, “These investments will help to secure energy supplies for domestic and international markets. The TNPL project demonstrates the tangible steps SPDC and its partners are taking to tackle the scourge of criminal activity—pipeline sabotage and crude theft in the Niger Delta, which is the cause of so much environmental and economic damage in this region.”
‘Strategic review’ initiated
Separately, Shell’s wholly owned unit SPDC reported the initiation of what it is calling a “strategic review” of the interests that it holds in selected onshore leases in the SPDC JV. SPDC JV partners are NNPC 55%, SPDC 30%, Total E&P Nigeria Ltd. 10%, and Nigerian Agip Oil Co. Ltd. 5%.
As part of the review, SPDC will initiate a “consultation with partners, and the potential exit from the interests it holds in some further onshore leases in the eastern part of the Niger Delta, subject to partner and regulatory approvals.”
The SPDC JV produced 750,000 boe/d in 2012 from 28 oil-mining licenses (OMLs) across the Niger Delta, both onshore and in the near offshore. “SPDC has been following a strategy of selective divestments of its onshore portfolio, concentrating the operating footprint into a smaller, more contiguous area, while supporting the government’s policy of encouraging investment by indigenous companies in the Nigerian oil and gas industry,” the company said.
Since 2010, SPDC has sold its interest in eight OMLs for a total of $1.8 billion.
Sunmonu further commented, “Nigeria remains an important part of Shell’s portfolio, with clear growth potential, particularly in deepwater and onshore gas. This strategic review marks another step in refocusing the SPDC portfolio.”
Saudi Arabia’s Naimi Says Current Situation Best for Oil
Saudi Arabia, the world’s largest crude exporter, is content with current conditions in the oil market, the kingdom’s petroleum minister said three days before OPEC members meet to assess the group’s output policy.
“This is the best environment for the market,” Ali al-Naimi told reporters today in Vienna when asked about the balance of supply and demand. “Demand is great,” al-Naimi said as he arrived at his hotel.
The 12-member Organization of Petroleum Exporting Countries will review its collective production target on May 31 at the group’s headquarters in the Austrian capital. OPEC, which supplies about 40 percent of the world’s oil, kept its official output ceiling unchanged at 30 million barrels a day the last time it met, in December.
Global demand is forecast to rise 800,000 barrels a day to 89.7 million barrels a day this year, requiring 29.8 million of supply from OPEC, the organization said in its monthly oil market report on May 10. It warned that a stalling economic recovery in the euro area and a slowdown in Russia and parts of Asia may temper consumption.
The OPEC basket price for crude, representing members’ export grades, fell below $100 a barrel on April 15, for the first time since July 2012. It has traded either side of that level in recent weeks and was last at $99.56 yesterday. North Sea Brent crude, used to price more than half of the world’s oil, dropped 6 percent this year to trade today at about $104.50 a barrel on the ICE Futures Europe exchange in London.
April Increase
The United Arab Emirates sees current crude prices as “suitable and fair” and not damaging to consumers, Suhail Mohammed Al Mazrouei, the nation’s energy minister, told the U.A.E.’s official WAM news agency yesterday.
OPEC pumped 30.7 million barrels a day of crude in April, up 0.7 percent from 30.49 million in March, according to a report from the Paris-based International Energy Agency published May 14. Data compiled by Bloomberg show that Saudi Arabia, the U.A.E. and other OPEC members produced 30.9 million barrels a day in April, the highest output since November.
“Given the present price level as well as the outlook for crude market fundamentals for the second half, we expect Friday’s OPEC meeting to be rather uneventful, with the producer group likely to keep its current output target whilst continuing to verbally support the $100 level,” David Wech, an analyst at JBC Energy GmbH in Vienna, said today in an e-mailed note.
OPEC is likely to keep its collective production target unchanged this week, according to two delegates from different OPEC nations, who asked not to be identified because the decision isn’t final yet.
The group’s collective production target is “working beautifully,” and there is no need to publicize individual national limits on May 31, Abdalla El-Badri, OPEC’s secretary general, said on April 4
Monday, 17 June 2013
Chinese supercomputer named as world's fastest
Chinese supercomputer named as world's fastest
Originally published: June 17, 2013 9:11 AM
Updated: June 17, 2013 9:23 AM
By The Associated Press
BEIJING - (AP) -- China has built the world's fastest supercomputer, almost twice as fast as the previous U.S. holder and underlining the country's rise as a science and technology powerhouse.
The semiannual TOP500 official listing of the world's fastest supercomputers released Monday says the Tianhe-2 developed by the National University of Defense Technology in central China's Changsha city is capable of sustained computing of 33.86 petaflops per second. That's the equivalent of 33,860 trillion calculations per second.
The Tianhe-2, which means Milky Way-2, knocks the U.S. Department of Energy's Titan machine off the no. 1 spot. It achieved 17.59 petaflops per second.
Supercomputers are used for complex work such as modeling weather systems, simulating nuclear explosions and designing jetliners.
It's the second time China has been named as having built the world's fastest supercomputer. In November 2010, the Tianhe-2's predecessor, Tianhe-1A, had that honor before Japan's K computer overtook it a few months later.
The Tianhe-2's achievement shows how China is leveraging rapid economic growth and sharp increases in research spending to join the United States, Europe and Japan in the global technology elite.
"Most of the features of the system were developed in China, and they are only using Intel for the main compute part," said TOP500 editor Jack Dongarra in a news release accompanying the announcement. "That is, the interconnect, operating system, front-end processors and software are mainly Chinese," said Dongarra, who toured the Tianhe-2 development facility in May.
Copyright 2013 The Associated Press. All rights reserved.
Turning natural gas into liquid
http://m.youtube.com/#/watch?v=QgtSoEJD9HE&app_data=%7B%22pi%22%3A%2251bb2f663c99bc052d000006%22%2C%22pt%22%3A%22wall%22%7D&desktop_uri=%2Fwatch%3Fv%3DQgtSoEJD9HE%26app_data%3D%257B%2522pi%2522%253A%252251bb2f663c99bc052d000006%2522%252C%2522pt%2522%253A%2522wall%2522%257D
Friday, 14 June 2013
(Reuters) - Oil traders are gently tapping the brakes on the thriving business of shipping U.S. and Canadian crude oil by rail, industry data showed this week, the first sign of a slowdown after a two-year boom.
As price spreads for moving sweet North Dakota or Canadian crude to premium markets on the Gulf Coast slump to their lowest since early 2011, companies are shifting more oil back through pipelines rather than using costlier railcars, raising new questions about the longevity of oil-by-rail.
FINANCIAL COMMENTARIES AND GUIDES
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At 13,664 cars through June 8, the latest week's loadings are still up 28 percent from a year ago, equivalent to about 1.4 million bpd. With crude oil estimated to make up about half of all such shipments, that's about a tenth of U.S. production. Weekly AAR data do not distinguish between crude and refined fuels.
Still, the annual growth rate is much slower than the 50 percent surge since the start of the year. In the first quarter alone, crude oil shipments jumped by 166 percent to the equivalent of 760,000 bpd, AAR said last month. Since early 2011, traffic has been growing mostly steadily every week.
Apart from a brief dip in early 2013, this is the first meaningful slowdown since oil companies began reviving a mode of transport that most had abandoned decades ago, using the rails to help get a gusher of shale oil production in remote areas not served by pipelines to refiners eager for cheaper oil.
Most analysts say it is likely to be a temporary lull. Some pin it on a reduction in Canadian output due to maintenance, and refinery work in the U.S. Midwest. They also note that refiners like Phillips 66 have signed long-term deals to receive Bakken crude by rail, and that there is no excess pipeline capacity in key areas like North Dakota.
Genscape, which uses cameras and infrared equipment to monitor both train traffic and oil pipelines, has also seen the switch, but believes rail traffic can't drop much further.
"I think the pipelines have come very close to filling back up, so the incremental barrels have to move by rail," said Brian Busch, Director of Oil Market and Business Development.
Yet the slowdown in rail shipments may unnerve some of the energy companies, logistics groups like Sunoco Logistics and tank car manufacturers like Trinity Industries who are investing hundreds of millions of dollars to get in the game, and disappoint operators like Union Pacific Corp and Canadian Pacific Railway for whom oil is a small but growing source of revenues.
"If we see the differentials stay tight like this for more than a few months some companies are definitely going to sit up and take notice," said Martin King, analyst at FirstEnergy Capital in Calgary.
Sandy Fielden, an analyst at consultants RBN Energy, said there are signs that lease rates for tank cars are also ebbing.
It all adds to growing evidence that the U.S. oil market is entering a new phase, leaving behind a time when price spreads and trading opportunities were defined by the lack of transportation infrastructure to get booming shale crude to market. After a wave of new investment, producers now have more options for reaching different markets, boosting prices.
"The past 18 months have brought booming business for the rail industry from crude-by-rail and every boom inevitably has a bust. It remains to be seen if we have reached that point yet," he wrote in a report published on Thursday.
A PAUSE
Speculation of a pause after two years of rising oil-by-rail shipments has grown since early April, as the closely watched Brent/WTI price spread fell to less than $10 a barrel. That is the lowest since early 2011, when a rapidly widening spread opened up an arbitrage for using costly railway transport to ship the growing volume of Bakken crude to southern markets.
Yet the downturn in traffic comes just as more and more industry officials and analysts have begun backing the view that moving crude by rail is more than simply a stopgap measure, one that will help keep oil flowing until new pipelines are built.
Increasingly it is being seen as a potentially important longer-term option for producers, refiners and traders who can benefit from the flexibility of easily moving any type of crude to almost any refinery on the continent. With a pipeline, both supply and purchase options are far more limited.
That may be especially true for refiners on the West and East coasts, which lack major pipelines to move crude oil to their regions. Canadian producers may also continue to use rail cars, particularly those with special heating coils to move heavy bitumen that can't be easily shipped in pipeline.
"Until you see some pipeline plans emerge to move Midcontinent crude to the East or West coasts - which you haven't yet - you're going to continue to see rail be viable," said Allen Good, an analyst with Morningstar.
Despite widespread optimism over the long-term outlook, the collapse in crude spreads this spring has caught many traders by surprise. And for the moment, it's getting worse.
The spread between Bakken crude at the pipeline hub of Clearbrook, Minnesota and benchmark Light Louisiana Sweet fell from nearly $30 in early March to a then-record low of around $13 in May. Analysts estimate it costs $12 a barrel for the rail journey, about three times more than via pipelines.
This week the spread has dropped to just $6 a barrel after an outage at a Canada sands production unit.
Bishops hold prayer vigil outside Mandela hospital
1:40 pm
ShareThe clerics, sporting flowing purple robes and white collars and representing a variety of denominations, stood hand-in-hand to say prayers for Mandela, who is said to be improving but still in a serious condition.
“Thank you (God) for the speedy recovery of Dr Nelson Mandela,” said Bishop Abraham Sibiya of the Christ Centred Church Episcopal Soshanguve, to chants of “amen”.
After a visit to the hospital late Thursday, President Jacob Zuma said the health of the country’s first black president “continues to improve but his condition remains serious.”
The hospital is under lockdown and entry is restricted to Mandela’s close family and those cleared to have business inside the hospital.
Sibiya told AFP that church leaders had come out in response to Zuma’s call to pray for the 94-year-old hero of the struggle against white-minority rule.
Zuma’s spokesman Mac Maharaj said he had no update on Mandela’s condition when contacted by AFP early Friday.
Mandela was admitted to hospital in the capital Pretoria in the early hours of Saturday for a pulmonary condition that has plagued him for years.
It is his fourth hospital stay since December, leading to a growing acceptance that the much-loved father of the “Rainbow Nation” may be nearing the end of his life.
Despite the more positive assessment of Mandela’s condition, concerns continue to grow and Zuma has asked the nation to pray for him.
“So we came to pray that God will heal former president Mandela and also we came to pray for the family that God will strengthen them at this difficult time and give them strength to face each and every day they go through,” Sibiya told AFP.
Members of Mandela’s family, known for frequent internal feuding, have been visiting him regularly in a public display of unity.
On Friday morning his daughter Zenani, who is South Africa’s ambassador to Argentina, visited him, as did some grandchildren and great grandchildren.
Mandela has a long history of lung problems since being diagnosed with early-stage tuberculosis in 1988 during his 27 years in prison at the hands of the apartheid regime.
Experts say that infection makes him vulnerable to recurrent lung infections.
Thursday, 13 June 2013
4 dead in murder-suicide at St. Louis business
4 dead in murder-suicide at St. Louis business
Police said two men and two women were shot inside a business incubator.
Two men and two women were shot dead Thursday afternoon in a murder-suicide after an argument at a St. Louis business, police reported.A semiautomatic handgun was recovered.
The shooting occurred about 1:45 p.m. CT (2:45 p.m. ET) on Cherokee Street, in the south end of the city, KSDK-TV said. The gunman worked at a home health care business inside the Cherokee Place Business Incubator, said Police Capt. Michael Sack.
The dead include the business owner and three employees. Sack said the gunman argued with his victims before opening fire and then killing himself. The dead were all in their early 40s to mid-50s.
The Riverfront Times reported that the gunman was the owner.
None of the dead have been identified, and no details yet about the nature of the argument that preceded the bloodshed.
A lawyer with an office in the building told the St. Louis Post-Dispatch that the health care business was owned and staffed by Somalian immigrants, and that he had heard "heated arguing" before.
The building is a former movie theater that houses between five and 10 small enterprises. It is part of the Cherokee Station Business District, a seven-block stretch that includes retail, dining, art and entertainment.
The Associated Press writes that the shooting occurred "where many Hispanics have relocated in recent years. The street is lined with antique shops, kitsch stores and
Thursday, 17 November 2011
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